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Using Google Analytics To Collect & Benefit From AdWords Position ROI

As an agency, we talk a lot about client expectations and understanding. Reality and actuality sometimes don’t start off in the same place, or even the same hemisphere. When we talk about Google AdWords, clients sometimes expect a few hours of education on how the setup of a campaign works, and then they’re off and running – generating thousands of dollars with minimal involvement.

That’s their expectation. The reality is AdWords for even a moderate budget could really be a full-time, 40-hour-per-week job. There are many intricacies in an AdWords account, and it’s becoming more complicated by the day. Analytics plays a vital role in deciding how to spend your money effectively.

Buying a number one ad position in Google can bankrupt even the heftiest of budgets, and honestly, do you need that number one position to make more money? Could number 4 make you more, or just as much, for a much reduced investment? Once you determine the best position for your keywords, how do you make sure they stay there?

In this article, we’ll show you how to find the most profitable positions, and how to create automated rules in AdWords to ensure your keywords show ads in the most desirable places on the search results pages.

Now we can see in which positions our keywords become the most profitable – profitable – not necessarily the highest earners. I can spend $10,000 on a number one position for 30 days, and make $20,000. I made a 100% return on my investment. If I buy the same keyword into the number 4-6 positions, spend $5,000 for 30-days, and receive that same $20,000 in revenue – I just increased my ROI to 300%.

Here’s how to see the best position for the investment in Analytics.

First select “Advertising” from the sidebar menu. Then choose “AdWords” and “Keyword Positions” from that sub-menu.

From this report view, you can see how many AdWords visits your keywords received, and the Site Usage for each of those keywords. This can help you determine which positions and keywords provide the lowest bounce rate, longest time on site, etc.

If you don’t track revenue with your AdWords account, this is still extremely important information to have.

If you do track revenue, you can take this report one step further. You can see how much revenue you generated per keyword, by position. This is really important when evaluating the necessity of a number one ranking.

First choose “Ecommerce” just below the Explorer tab above the graph:

Then choose “Revenue” from the dropdowns. You can do one or both here; it is good to see position performance for the keywords that make the most money and for the keywords that get the most visits.

In the example above, you can see that the keyword “Pink Widgets” made the most money in the 8th position in the sidebar. This is odd, but it’s not unusual. You’ll see results like this all the time.

Here’s another example where position 3 at the top brought in 5x the revenue that position 1, 2, or 4.

So what do we learn? We now know that position one, for these keywords, is not necessarily the top converting position. The formula you use to determine ROI for any given position is:

I can now adjust my CPC bid for this keyword and use an automated rule to increase or reduce my budget to keep me in a particular position. Previously, we used the “Position Preference” feature, but that was retired last year…so we now create rules to handle positioning of keywords.

To create an automated rule, choose the keyword(s) in your AdWords account and pick “Automate” and then “Change max. CPC bids when” from the drop down menu:

From here, you set the position and bid where you think they need to be. You’ll need to set a rule to raise the bid when the “Avg. position worse than” is triggered, and a separate rule for “Avg. position better than.”

This is definitely something that needs to be monitored and tweaked until it’s working perfectly. I strongly recommend setting a max bid for each click so the rule cannot keep escalating the bid without a limit. I also think the Frequency setting will take a bit of work.

You can set 2 or 3 rules and apply them to multiple keywords at once, or pick them from the list of existing rules, so once your rules are set up – adding them across the account becomes much easier.

The “Automated rules” section of AdWords will list all of your rules and let you tweak them, and see when rules ran on particular keywords or ads. Be sure you read and understand how rules work before you start. I recommend the Automated Rules best practices document from Google.

Once you’ve set up your rules, be sure to annotate the change in your analytics account so you can watch and see if the ROI from your AdWords account improves over time.

If things aren’t going well, tweak your bid or your position until they improve. This technique will definitely take time, but it can offer huge returns when done correctly. This is just one more reason your AdWords account should not be an afterthought in your entire online marketing strategy.

Some opinions expressed in this article may be those of a guest author and not necessarily Search Engine Land. Staff authors are listed here.

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About The Author

Carrie Hill is the co-founder of Ignitor Digital, along with long-time colleague Mary Bowling. After years working for other agencies and learning the ins and outs of great customer service, Carrie and Mary opened Ignitor Digital to serve the small and very small business with top-quality Local Search, SEO and Social Media services. When not working, Carrie loves to cook for friends and family, hang out with her pretty awesome kids, and read books that have little-to-no educational value!

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Great article. So much to learn with PPC! Thanks for the article Carrie

http://www.andykuiper.com Andy Kuiper – SEO Analyst

Interesting, thanks Carrie. I appreciated the step-by-step instructions, they easily broke down a complicated set of manoeuvres into a number of easy steps ;-)

http://twitter.com/GnosisArts Gnosis Media Group

Are you sure? Because I’ve read in more than one place that ad position really has no statistically significant effect on ROI for the vast majority of advertisers. But I’m intrigued now, so I want to look deeper into this one to form my own conclusion.

I think ROI is greatly affected by position – REVENUE is a different number than return. if you spend less for lower positions, but make the same or very close to the same money – your return on investment is much higher than paying a lot for top positions.

The numbers show that revenue based on position can vary for some keyword phrases…that’s shown clearly in the screenshots above.

http://twitter.com/GnosisArts Gnosis Media Group

There’s a lot of meat in here, Carrie. I’ve been studying this short post for that past hour, and it’s starting to make my head spin a bit. Question: Would Either Enhanced CPC or Conversion Optimizer probably do this also?

http://twitter.com/GnosisArts Gnosis Media Group

Awesome stuff. I see what you mean. I’m beginning to think that the blanket statement, “Conversion Rates Don’t Vary Much with Ad Position” (which is what the Adwords people would have us believe) is no longer valid – if it ever was. Because, as I’m looking at my keywords now, I see that conversion rate is definitely varying, quite dramatically in some cases, by ad position.

http://twitter.com/meseostrategist Rahul SIngh

helpful article for new learner as well in PPC and Analytic integration

http://twitter.com/xnumerik xnumerik

My knowledge of AdWords and Analytics is still basic but reading such articles motivates me to learn a lot more to make the most out of them, thx for the great tips, I have tweeted this link too!

Pat Grady

We manage client PPC on an ROI-centric basis, but every once in a while, a client asks us “why aren’t we in first position for Red Widgets?”… thinking of changing my explanation / discussion to “sure, which better converting keyword would you like me to sacrifice to make this happen?” Bahaha!

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http://www.rimmkaufman.com/ George Michie

This is not an “old theory”, it is an old fact based on careful study of tons of data, and done with an understanding of statistical variance. This post totally misses the boat. Click volume varies materially with position. Revenue per click does not. Cost per click varies terrifically by “position.” The proper way to bid for maximum revenue within an efficiency constraint is to measure the revenue per click and bid to a comfortable fraction of that number to hit efficiency targets. Position is as much determined by competitor’s bids as your own. Position bidding was a bad idea before personalization made the concept of position irrelevant. Now it’s just absurd.

http://twitter.com/jasmineJaz2 jasmine (Jaz)

good information about Google analytic,ppc thanks for sharing

http://www.makeitbloom.com/xurxo-vidal/ Xurxo Vidal

I agree with George Michie that ad positions impact traffic volume rather than revenue per click. Revenue per click is directly influenced by keyword selection and ad copy in combination with landing page content and experience.

Lowering positions can yield a better ROI because conversion rates will dictate revenue per click. The higher the conversion rate, the more you can afford to bid to generate traffic profitably. It would have been interesting to see if there were any significant fluctuations in conversion rates based on ad positions (provided that a particular keyword got a similar amount of exposure in each position).

Also there’s the question of statistical significance. Any optimizations based on too little data might likely backfire or cause missed revenue. Could it be that certain keywords generated higher revenues in lower positions in the examples shown because they more often triggered ads to appear in lower positions based on what the bids allowed (and more rarely showed up in higher spots)?

http://twitter.com/GnosisArts Gnosis Media Group

We have implemented Carrie’s suggestions above this week and we’ve already seen increased conversions. Too early to tell if there is significance, obviously, but it certainly looks promising.

Second, you said ” Revenue per click does not [vary by ad position].” But how can this be? If Ad A in Position 1 produces a conversion rate of 20%, but only produces a 2% conversion rate in position 10, then it doesn’t take an expert statistician to figure out that Position 1 is probably generating more revenue that Position 10.

So, why is Position Bidding a bad idea again?

http://www.rimmkaufman.com/ George Michie

Exactly right. It is not easy to study precisely because if you bid smartly you’re likely higher on the page for KW that convert better, which can make folks believe RPC varies. RKG, EF, Marin, The Search Agency and Google themselves have all reached the same conclusion. We found a slight decline in conversion rates in positions 1 and 2 when they are above the organic listings, and a slight increase in conversion rates at the bottom of the page, but too slight to impact smart bidding systems (within the error bars of RPC calculations for almost any ad). If you’re talking about a KW like “Car Insurance” where the advertiser might spend a couple million bucks a month on a single KW, it’s worth playing with, but personalization of results make the averages meaningless.

http://www.rimmkaufman.com/ George Michie

For ecommerce companies that take sales on the website it’s simply revenue driven divided by the number of clicks. Or conversion rate times average order size. If you’re limited to Google’s conversion tracking conversion rate is the best proxy. In all of paid search the reality is that there may be exceptions to the rule. Best of luck to you.

http://twitter.com/jonintweet Joni S.

Hey Carrie,

this is an excellent approach to determining keyword profitability. The problem with ‘cost per conversion’ is indeed that it neglects the REVENUE of conversion.

However, the explanation behind the strange behavior (revenue differs based on position) may be simply that those customers bought more. If this is the case, the return of a position is actually affected by a random variable, which is the different consumption behavior of customers clicking. In consequence, setting bids to average positions (like 8th) would actually not be relevant at all, as the data is not based on consistent but random behavior.